Asked by Ashley Hammerscchmidt on Jul 01, 2024
Verified
Which one of the following statements is correct concerning the differences between preferred and common stock?
A) Common shareholders have first right of priority after creditors in liquidation.
B) Preferred shares carry voting rights while common shares do not.
C) Common shareholders generally have more control over a corporation than preferred shareholders.
D) Common dividends in arrearage must be paid prior to any additional preferred stock dividends.
E) Common stock is a form of equity while preferred stock is a form of debt from a legal standpoint.
Preferred Shares
A class of ownership in a corporation that has a higher claim on assets and earnings than common shares, often receiving dividends before common shareholders.
Common Stock
A type of equity security that represents ownership in a corporation, entitling the holder to vote on corporate matters and receive dividends.
- Comprehend the specifics and rights pertaining to preferred and common shares.
- Understand the significance of voting rights and approaches in the context of corporate governance.
Verified Answer
TW
tyler Williams5 days ago
Final Answer :
C
Explanation :
Common shareholders typically have voting rights that allow them to exert more control over the corporation, such as electing the board of directors, compared to preferred shareholders who usually do not have these rights.
Learning Objectives
- Comprehend the specifics and rights pertaining to preferred and common shares.
- Understand the significance of voting rights and approaches in the context of corporate governance.